The 4 Savings Accounts Everyone Needs

If you feel that you are so behind on your savings goals, please remember that that makes you normal. As Filipinos we have always placed our families, our comfort, our wants as our priority but very rarely were were educated to save, write our goals and dreams so we can create a plan to work in achieving it. It is rarely discussed in households, and some people are even uncomfortable in discussing it with their spouses and children.

So to help you better in securing your finances, here are essential 4 savings accounts that everyone should have.

Emergency Fund or Emergency Savings - from the word itself this is an account where you will put money in to save up for unexpected large expenses. Like losing a job, moving houses or an injury. This is something that you have to put in place before you make any big expenses like buying a house.

1. How much? Ideally the amount that should be there is you monthly expenses x 3. Some would even go up to 6 months or 1 years worth expenses. This will leave you feeling secured that no matter what happens, bills will be paid, you and your family will get to eat and have shelter while you are looking for another source of income.

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Where to save it? Ideally it should be in a separate account where you can not easily access. It should have high interest rate, but don't put it somewhere where you will get penalized if you ever will take it out. I would suggest create an account in CIMB bank or ING bank where you can get 4% per annum interest. You will actually see the money coming in every month. So to compute the monthly return you will multiply your bank balance to 4% divided by 12 or .0033. So if you have Php 800k in your emergency fund you will get Php 2,666.66 (less tax) for free! Since it is a bank, you can take the money out when you need it without incurring any penalties.

Retirement Savings - These are long term savings that you will never touch until you reach retirement.

Where to save it? Here in the Philippines we have SSS. Some people tend to take this for granted. Especially those who are not working in a private company. You can speak to some of our Senior Citizens. I believe some retirees get at much at 19k a month or probably more depending on how much they contributed during their working years. Also on your 60th birthday you will get a lumpsum of a 1 year monthly pension which you can use for anything. So start now and dont take it for granted. Php 300 to Ph 2400 you will contribute today will benefit you in the future. You can already pay SSS via GCASH so it is so convenient.

Short Term Savings - These are savings that you have liquid or easily accessible which is not your emergency fund. This is for when you want to save for your trips, appliances or anything that you want to save for. It should be a separate from your Payroll account, Checking and Emergency savings account and you will only make the purchase once you have reached the amount you need for that item.

Where to save it? You can add additional bank accounts for your short term savings. This will help you avoid charging items that you really cant afford in your credit cards. CIMB and ING bank would also be good options so your money is earning interest.

Long Term Savings - This should be a separate bank account for your big life goals like buying a home, going back to school, real estate for rentals etc. These accounts should be used by savers who don't need that money for at least 5 to 10 years. This account should be able to bring you much higher returns so your savings can grow much quicker.

Where to save it? I suggest Pag-Ibig MP2. You can open account in any Pag-ibig branch and you can pay it via GCASH. Interest for the past few years are as high as 7-8% per annum. However you will be required to keep your money there for either 1 year or 5 years (depending on what you choose during inception of the account). Note that there is a penalty if you take it out earlier that than.

Tips: If you can do an automatic transfer then good. But I got no luck in that area. So what I do is I set up a calendar in my phone where I will sit down for 1 hour right after payday to transfer money from my payroll account to my savings accounts before I even pay for anything. It doesn't have to be big it depends on what you are comfortable with. What's important is that we start now.

Note: The suggestions above are very conservative ways to grow your money there are definitely faster ways like putting up a business or put it in stock market but I those were too high risks for me. You are free to take a more aggressive approach.

So I hope this helps you in your financial journey. May the Heavenly Father Bless you more and keep you healthy and safe.